BOJ boosts bond buying again as yields approach its policy limit

THE Bank of Japan (BOJ) said it would increase scheduled bond purchases as an intensifying Treasuries sell-off pushed up global yields and weakened the yen.

The BOJ said it would buy 550 billion yen (S$5.4 billion) of 5 to 10 year debt at its regular operations, up from 500 billion yen scheduled. The decision came as Japan’s benchmark 10-year yield approached the 0.25 per cent upper limit of the central bank’s tolerated range, trading at 0.24 per cent on Tuesday (Sep 13).

The BOJ carried out a similar operation last week.

Japan’s bond market had previously come under heavy selling pressure in June when only unprecedented BOJ buying kept benchmark yields below the 0.25 per cent ceiling. BOJ governor Haruhiko Kuroda has emphasised his determination to stick with rock-bottom interest rates, even as global peers hike to tackle accelerating inflation.

Treasury yields jumped on Tuesday after US consumer prices exceeded forecasts last month, boosting speculation on another supersized Federal Reserve rate hike. The yen fell towards the closely-watched 145 level against the dollar, sparking further verbal intervention from Japanese officials. BLOOMBERG